How to Calculate Stamp Duty for Gift Deed?

हिंदी में पढ़ें
September 05, 2020
By Advocate Chikirsha Mohanty



When a property is gifted to any person, there are several legal rules and procedures that are needed to be followed. One must understand the legal implications of buying a property. If you don't complete the specific processes that are involved, your gift can get invalidated.  One such legal implication is the payment of stamp duty which is an important step in claiming ownership of the gifted property.
 

What is a Gift Deed?

A gift deed is a legal document gives details regarding the voluntary transfer of a gift from the donor (i.e. owner of property) to donee (i.e. receiver of gift) without any compensation or favor in return. A gift deed can be made for both movable goods as well as immovable assets. A gift deed for immovable property involves the gifting of some immovable property like a house. Similarly, a gift deed for movable property involves gifting of movables like a car or cash. A gift deed describes every detail of the transaction as necessary by law. 

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What is stamp duty?

Generally speaking, stamp duty refers to the tax levied by the government during any transaction of a property. A physical stamp is attached or impressed on the legal document for the transaction of property that denotes that tax has been paid. When a property is gifted to you mere physical possession is not sufficient. You also need to have legal evidence of ownership of the property which is done after paying the registration charges and stamp duty.

Stamp duty is levied and collected by the state government. It is the direct tax which is payable under section 3 of the Indian Stamp Act, 1899 on all documents of financial transactions including bills of exchange, promissory notes as well as property transactions. Stamp duty charges vary from state to state.

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Why do you have to pay stamp duty?

The state government collects stamp duty during the registration of property. It is paid to validate the transfer agreement. A stamp put on the gift deed for transferring the property acts as a legal document to prove your ownership in the court. Without paying stamp duty, you cannot legally claim a gifted property as your own. Thus, it is very important to pay the full stamp duty charge for the purpose of claiming ownership.
 

What are the factors affecting stamp duty in India?

As mentioned above, stamp duty varies from state to state. However, there are certain factors that determine the amount of stamp duty which has to be paid by the person.-

  • Location- Different areas have different stamp duty rates. For example, if your property is located in a municipal area, you would have to pay a higher rate than property located in a rural area.

  • Age of the building- Since the stamp duty rates are calculated as a percentage of the total market value of the property, therefore, the age of property plays a crucial role.  Old buildings usually attract less stamp duty charges and new buildings attract a high charge. This is because the market values of old buildings depreciate.

  • Age of the Owner- Almost all state governments have subsidized stamp duty charges for senior citizens. So, the age of the owner plays an important role in determining the charge.

  • Gender of the owner- Just like senior citizens, women also get a concession on stamp duty rate if the property is in her name.

  • Purpose- Commercial buildings attract a high stamp duty fee when compared to residential buildings. This is mainly because commercial buildings would need more amenities, floor space, and security features.

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How to pay stamp duty in India?

There are three ways through which one can pay stamp duty charges to the respective state government-

  • Stamp Paper- Executing a transaction on non-judicial stamp papers is a traditional method of acquiring property by paying directly to the registered authority. Both parties have to write down the terms of the agreement on the paper and get it signed. The stamp vendor records every detail about stamp purchaser and the transaction; the details are then mentioned at the back of your stamp paper.

  • Electronic Stamping- To avoid counterfeit stamp papers and to make stamping easy, the Government introduced e-stamping. E-stamping basically means the stamping done online. It is a more convenient way to pay stamp duty. In order to do e-stamping, you have to visit the SHCIL (Stock Holding Corporation of India Limited) website.

  • Franking-Franking is another process where the stamp duty is paid to the authorized banks which have a franking centre. Here, you need to prepare the documents first and then take it to the authorized centre/bank which accepts the payment of stamp duty and physically stamps the paper to make it legally existing.

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Stamp duty rates in major cities

The stamp duty rates vary from state to state. Here are the stamp duty rates for some major cities-

  • Delhi- Delhi's stamp duty rates differ for men and women. For women, the stamp duty is charged at the rate of 4% of the market value of the property and for men, the rate is 6%.  For joint-owners (men and women), the rate is at 5%.

  • Kolkata- When a property is gifted to a blood relative, the stamp duty charges are at the rate of 0.5% of the market value of the property. When it is gifted to any other person, the stamp duty rate is 5% in panchayat areas and 6% in municipal areas, corporation areas and urban areas. If the market value of the property is more than Rs. 40 lakhs, then an additional 1% stamp duty is charged in both urban and rural areas.

  • Bangalore- The stamp duty charges, when the property is gifted to the donee (receiver of the gift) who is not a family member, is at the rate of 5% of the market value of the property. If the property is gifted to a family member, then the stamp duty charges are fixed-

  1. If the property is situated within the limits of Bangalore Metropolitan Regional Development(BMRD) Authority or Bruhat Bangalore Mahanagar Palika(BBMP) or City Corporation, then the charge is Rs.5,000/-.

  2. If the property is situated within the limits of City or Town Municipal Council or Town Panchayat area, then the charge is Rs.3,000/-.

  3. If the property is situated within the limits other than the limits specified in points (I) and (II), then the charge is Rs. 1,000/-.

  • Mumbai-  In Mumbai, the stamp duty fee differ as per the type of the property which is being gifted, such as:-

  1. In the case of agricultural and residential land, the stamp duty is Rs 100.

  2. In case of any immovable property which is given to a family member, stamp duty is 3% of the market value of the property. If a person other than the family member is giving the property, then, in that case, the stamp duty will be 5%.

  • Hyderabad – Hyderabad's stamp duty rates differ as per the relationship of the donor (person gifting the property) and donee.

  1. If you gift the property to a family member, then stamp duty is 1% of the market value of the property

  2. In the case of any other gift, the stamp duty rate is at 4% of the market value.

  • Chandigarh- In the Union Territory of Chandigarh, the stamp duty charges are at the rate of 6% of the market value of the property. There will not be any application fee charged in case the property is transferred to any blood relative within the lifetime of the donor.

  • Jaipur- In Jaipur, the stamp duty charges for family and non-family remains the same at the rate of 5% of the total market value of the product.

  • ?Chennai-  In Chennai, the stamp duty charges for gift deed for family and blood relatives is at the rate of 1% of the market value of the property, whereas, the rate is 5% when the property is gifted to any other person.?
     

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Why do you need a Lawyer?

A good property lawyer has the experience and knowledge regarding gift deeds and stamp duty to be paid on them. It is therefore advised to consult a lawyer before concluding a gift deed and paying an incorrect stamp duty. An incorrect stamp duty payment can cause future troubles. A lawyer will ensure you are guided in the right direction. 
 





 

These guides are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.


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